Russian bankers concerned with money transfer scams

Illegal money transfers from Russia reached $49 billion in 2012 or 2.5 percent of the country’s GDP, with almost half of that sum sent out by a single group of "well-organized" people, central bank chief Sergei Ignatyev said

Illegal money transfers from Russia reached $49 billion in 2012 or
2.5 percent of the country’s GDP, with almost half of that sum sent out
by a single group of "well-organized" people, central bank chief Sergei
Ignatyev said on Wednesday.

“This could be payment for the delivery of drugs… payments for grey
imports … bribes and kickbacks for officials or managers making
purchases at large private companies with ineffective internal controls.
Or this may involve tax evasion schemes,” Ignatyev said in an interview
with Vedomosti business paper.

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Ignatyev said $14 billion of that $49 billion was transferred to
foreign accounts abroad in trade operations, while $35 billion involved
capital operations referred to as “dubious” in the balance of payments
and included in the capital outflow count.

Russia’s net capital outflow reached $56.8 billion last year -
therefore indicating that up to 60 percent of money which left Russia
was brought out illegally.

“I estimate the damage to the budget system from these operations at
about 30 percent of the volume of dubious operations or about 450
billion rubles a year. If we add internal cash-converting operations
that are organized by the same people, then I believe the overall damage
to the budget system will exceed 600 billion rubles a year,” he said.

The Russian budget loses 600 billion rubles ($20 billion) annually
from such money transfer scams, he said - comparable to the entire sum
spent last year on education (604 billion rubles) or health care (614
billion rubles), according to Vedomosti.

Shell companies play the most significant role in these dubious
operations, Ignatyev said, adding there were 3.9 million businesses
registered by Russia’s Federal Tax Service compared with just 2 million
organizations that really existed.

“Also, our analysis shows that more than half of all dubious
operations are held by firms directly or indirectly bound by payment
relations with each other. The impression is created that all of them
are controlled by one well-organized group of people. If the
law-enforcement agencies concentrate their efforts considerably, they
will be able to identify these people and also the beneficiaries of
these operations,” Ignatyev said.

Under the central bank’s methodology based on international
standards, dubious operations involve export revenues that were not
received on time, the cost of goods and services prepaid but not
received under import contracts, and money transfers abroad under
fictitious operations with securities and loans.

Ignatyev said Russia urgently needed to adopt a law developed by the
Federal Financial Monitoring Service allowing banks to unilaterally
cancel relations with clients making dubious transactions, streamline
the business registration procedure and introduce liability for nominal
directors.

The volume of dubious operations has stayed steady at 2 percent of
Russia’s GDP in the past four years, the central bank estimates.